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9. The ground no. 1 is with respect to computing Annual Lettable Value(ALV) of the two residential flats owned by the assessee bearing flat no. 3 (2170 square feet) and flat no. 8 (3062 square feet) both situated in Sterling Bay Co-operative Housing Society Limited , 103, Walkeshwar Road, Mumbai-400 006 , under the head „Income from House Property‟. The flat no. 8 was let out by assessee to its Director , Mr. Shapoorji Pallonji Mistry who is stated to be residing in the said flat since 01-03-1990 and paying monthly rental of Rs. 10,000/- to the assessee company, while flat no. 3 owned by the assessee was stated to be lying vacant. The AO made enquiries from various real estate websites such as magicbricks.com, 99acres.com etc to come to conclusion that the prevailing market rent of these flats is Rs. 200 per square feet per month which should be taken as ALV of these residential flats for computing income under the head „Income from House Property‟. The assessee relied upon the orders of ITAT, Mumbai in ITA no. 4036/Mum/2008 for AY 2004-05 in assessee‟s own case wherein annual value as declared by the assessee in its return of income was accepted by ITAT. The AO observed that ITAT,Mumbai in AY 2004-05 followed its own order for AY 2003-04 in ITA no. 1228/Mum/2009 vide orders dated 18-05- 2009 , which were concerning flat no. 8 which was let out by the assessee to its Director Mr. Shapoorji Pallonji Mistry, while ALV of flat no. 3 was never an issue before ITAT. The AO thus observed the assessee cannot be granted benefit of earlier orders of the ITAT as ALV of flat no. 3 was never an issue before the tribunal. The AO observed that the assessee has taken municipal valuation for computing ALV and since actual rent was higher than municipal rateable value, the actual rent was considered for computing income under the head „Income from House Property‟ so far as flat no. 8 which was let out by the assessee is concerned and for the other flat no. 3 which was lying vacant municipal rateable value was adopted for computing ALV under the 1961 Act, But the AO adopted prevailing market rate of rent of Rs. 200 per square feet per month to compute ALV for bringing to tax income from house property with respect to both the flats. The AO observed I.T.A. No.6414/Mum/2016 that municipal valuation is only for fixation of municipal taxes and is not relevant for determining ALV under the 1961 Act. The AO referred to provisions of Section 23(1)(a) of the 1961 Act wherein expected lettable value is to be adopted for computing income under the head „ income from house property‟. The AO observed that just because municipal authorities did not revise municipal valuation, the same cannot be relied upon and benchmarked for computing income under the head „income from house property‟ under the 1961 Act. The AO relied upon recent decision dated 08- 08-2014 of Hon‟ble Bombay High Court in the case of CIT v. Tip Top Typography (2014) 48 taxmann.com 191 (Bom) and computed ALV for both the flats by relying upon the websites of 99acres.com, magicbricks.com etc wherein the monthly rental was stated to be of Rs. 200 per square feet per month for similar flats in this area, vide assessment order dated 25-02-2015 passed by the AO u/s 143(3) of the 1961 Act.

12. The Ld Counsel for the assessee on the other hand submitted that municipal rateable valuation is to be taken into account for computing ALV under provisions of the 1961 Act . It was submitted that since actual rent received of Rs. 10,000/- per month w.r.t. flat no. 8 was higher, the same was adopted for computing ALV of flat no. 8 under the provisions of Section 23(1)(b) of the 1961 Act while for flat no. 3 which was lying vacant, the municipal valuation was rightly adopted by the assessee for computing ALV which is the sum for which the property was reasonably expected to be let from year to year within provisions of Section 23(1)(a) . He drew our attention to page 10-11 of paper book wherein detailed computation for computing income chargeable to tax under the head „Income from House Property‟ is placed w.r.t. both the flats. The learned counsel for the assessee submitted that the AO erred in adopting market value of rent being Rs. 200 per square feet per month of the similar property in the area based on website information as downloaded from magicbricks.com , 99acres.com etc. for computing ALV under the 1961 Act. The learned counsel for the assessee relied upon the decision of tribunal for earlier years in assessee‟s own case which are placed in paper book wherein municipal valuation was adopted to compute ALV but since the actual rent received was higher than the said municipal valuation w.r.t. flat no. 8, actual rent received or receivable of flat no. 8 was brought to tax under the head „income from house property‟. Our attention was drawn to tribunal decision dated 09.07.2009 for AY 2004-05 in ITA no. 4036/Mum/2008 in assessee‟s own which followed the decision of I.T.A. No.6414/Mum/2016 the tribunal for AY 2003-04 in ITA no.1228/Mum/2008 dated 18-05-2009 wherein actual rent received or receivable was brought to tax and the contentions of the assessee were accepted. It was also submitted that tribunal has for AY 1995-96 vide orders dated 17-09-2003 in the case of JCIT v. Shapoorji & Co.(Rajkot) Private Limited in ITA no. 40/Mum/1999 has come to the conclusion that ALV has to be computed based on standard rent determined in accordance with the Rent Control Act, annual municipal value which if available could be ALV and if the actual rent received or receivable is more than standard rent or annual municipal value, then the actual rent is to be taken as ALV of the property for the purposes of computing income under the head „Income from House Property‟ (page 111- 113/pb). It was submitted that the said decision of the tribunal for AY 1995- 96 was approved by Hon‟ble Bombay High Court in ITA no. 752 of 2004 vide orders dated 26-09-2007 in the case of CIT v. Shapoorji & Co. It was submitted that in these cases , the reference was to flat no. 3 which was taken over by the assessee in AY 2009-10 from Shapoorji & Co.(Rajkot) Limited. The learned counsel for the assessee also relied upon the decision(s) of Hon‟ble Calcutta High Court in the case of CIT v. Prabhabati Bansali reported in (1983)141 ITR 419(Cal.), Hon‟ble Bombay High Court decision in the case of M.V Sonavala v. CIT (1989)177 ITR 246(Bom.) , Hon‟ble Delhi High Court decision in the case of CIT v. R. Dalmia(deceased-through LR) (1987)163 ITR 525(Delhi) , decision of Hon‟ble Supreme Court in the case of Dewan Daulat Rai Kapoor v. NDMC (1980) 122 ITR 700(SC) and decision of ITAT, Mumbai in the case of DCIT v. Shripal S. Morakhia (2006) 7 SOT 0609(Mum-trib.) .

13. We have carefully considered rival contentions and perused the material on record including orders of the authorities below and case laws cited by rival parties before the Bench. We have observed that the assessee is undisputedly owner of two residential flats bearing flat no. 3 (2170 square feet) and flat no. 8 (3062 square feet) both situated in Sterling Bay Co- operative Housing Society Limited , 103, Walkeshwar Road, Mumbai- 400006. The residential flat no. 8 admeasuring 3062 square feet situated in a residential housing society „Sterling Bay Co-operative Housing Society Limited ‟ at Walkeshwar Road, Mumbai is let out by assessee to its Director namely Mr. Shapoorji Pallonji Mistry at a monthly rent of Rs. 10,000/- , I.T.A. No.6414/Mum/2016 while flat no. 3 situated in the same residential society is stated to be lying vacant. The assessee computed Income under the head „Income from house property‟ w.r.t. both the flats to be Rs.85,296/- while the AO brought to tax Income under the head „Income from house property‟ from these two residential flats to the tune of Rs.87,91,056/- . The assessee relied upon the rateable value computed by municipal authorities which as per the assessee is the expected value for which these flats are expected to be let from year to year , thus satisfying conditions as stipulated u/s 23(1)(a) of the 1961 Act. The amendments were carried out in Section 23(1) by the Taxation Laws (Amendment) Act, 1975 by introduction of clause(b) to Section 23(1) wherein in case property is let and if the actual rent received or receivable by the taxpayer is higher than sum for which the property might reasonably be expected to be let from year to year, the amount so received or receivable shall be deemed to be annual value of the property. The newly inserted clause(b) postulated a situation where the amount of sum for which the property might be expected to be let from year to year could be lower than actual rent received or receivable from the said property by landlord and in that situation actual rent received or receivable shall be deemed to be annual value of the property for bringing the same to tax as income under the head „Income from house property‟. We are concerned with the amended law as year under consideration before us is AY 2012-13 . In the instant case, the actual rent received or receivable by the assessee w.r.t. flat no. 8 being higher than municipal rateable value, the assessee has contended that the same is to be accepted and brought to tax under Section 23(1)(b) while for flat no. 3 which was stated to be lying vacant it is contended that only municipal rateable value can be brought to tax under the head „Income from house property‟ within provisions of Section 23(1)(a), which as per assessee culminated into the income chargeable to tax under the head „Income from House Property‟ aggregating to the tune at Rs.85,296/- from both of these flats after availing statutory deductions etc. , which value was infact offered for taxation by the assessee. The AO being in disagreement with the income so computed under the head „income from house property‟ by the assessee of these two flats relied upon recent decision of Hon‟ble Bombay High Court in Tip Top Typography (supra) which was pronounced on 08-08-2014 and observed that municipal rateable valuation of the entire society is very low being Rs. 4,91,804/- for the year 2011-12 and is not indicative of the fair I.T.A. No.6414/Mum/2016 market value at which the flats might be expected to be let from year to year as is contemplated by Section 23(1)(a). The AO observed that municipal rateable value adopted by municipal corporation for the entire society has in- fact fallen to Rs. 4,91,804/- in the year 2011-12 as against Rs. 5,88,985/- for the year 2004-05 which also indicate that the said valuation is not reliable as it is not indicative of prevailing market situation. The AO then proceeded to ascertain prevailing market rental of these flats in the area and after searching on the websites such as magicbrick.com, 99acres.com etc., arrived at a prevailing market rent of these flats to be Rs. 200 per square feet per month at which these flats were expected to be let from year to year during the relevant previous year, which fair rent was adopted by the AO to compute ALV w.r.t. both these flats which led to computing of Income of Rs.87,05,760/- under the head „Income from House Property‟ as against an amount of Rs. 85,296/- computed by the assessee as an income under the head „Income from House Property‟ w.r.t. both the flats. The matter went in appeal before learned CIT(A) who accepted the contentions of the assessee and granted relief to the assessee based on earlier decisions of ITAT and jurisdictional High Court ruling in assessee‟s favour. This is the background of the entire issue before us. Revenue is in appeal before us challenging the relief granted by learned CIT(A). We have carefully gone through the entire case laws cited before us. The municipal rateable value adopted by the assessee as per computation of income filed in paper book translates into municipal rateable value of Rs. 1.61 per square feet per month which as per municipal valuation is the amount of sum which the property is expected to be let from year to year while the prevailing market rent as per websites of magicbrick.com , 99acres.com etc. comes to Rs. 200 per square feet per month which reflects huge variation between the two valuation. It is pertinent to mention that the assessee has never disputed this market rate of Rs. 200 per square feet per month which the AO derived from websites but the contentions are only raised that this valuations cannot be accepted at law and contentions are advanced to apply municipal rateable value for computing ALV or in case of flat no 8 where the actual rent received or receivable is higher than municipal rateable, to adopt actual rent to compute ALV. It is pertinent to mention that the tenant to whom the flat no. 8 is let out is a Director of the assessee company and he is paying rent of Rs. 10,000 per month for a flat of 3062 square feet in a society situated in a I.T.A. No.6414/Mum/2016 posh South Mumbai area in Walkeshwar Road, Mumbai which translates into rent of Rs. 3.27 per square feet per month as against market rate of Rs. 200 per square feet per month as reflected in websites of magicbrick.com , 99acres.com etc for similar flats in the area. We will like to draw reference to some of the cases to understand how the ALV needs to be computed. Hon‟ble Delhi High Court in the case of CIT v. R Dalmia(decd.)(supra ) observed as under:

The Hon‟ble Bombay High Court concurred in decision of Tip Top Typography(supra) with the above decision of Full Bench of Hon‟ble Delhi High Court in the case of CIT v. Mani Kumar Subba (supra). The Hon‟ble Bombay High Court held in Tip Top Typography(supra) that when the monthly rental shows a total mismatch or does not reflect the prevailing rent, then AO is not prevented from carrying out necessary investigations and enquiry to find out the going rent of the property in question. The AO must have cogent material/evidences in his possession that parties have concealed the real position. The AO is required to disclose the material in his possession to the tax-payer for rebuttal before proceeding to adopt the prevailing market rent. The AO has to make comparative analysis of the I.T.A. No.6414/Mum/2016 comparable properties of similar nature before applying the prevailing market rent of the property under question. The satisfaction of the AO that the bargains reveal inflated or deflated rent based on fraud, emergency, relationship and other considerations which make it unreasonable must precede the undertaking of above exercise. The Hon‟ble Bombay High Court then held in Tip Top Typography (supra) that the AO has to then comply with the principles of fairness and justice and make the disclosure to the taxpayer so as to obtain taxpayers view. The Hon‟ble Bombay High Court then held that market rate in the locality is an approved method for determining the fair rental value but it is only when the AO is convinced that the case before him is suspicious, determination by parties is doubtful and then the AO can resort to enquire about the prevailing rate in the locality. The Hon‟ble Bombay High Court in the said case held that municipal rateable value may not be binding on the AO in such case. It was also held that the AO cannot brush aside the Rent Control legislation if the same is applicable to premises in question. Then in that event the AO has to undertake the exercise contemplated by the Rent Control Legislation for fixation of standard rent. It was held that either the AO should proceed to determine the standard rent himself in terms of the Maharashtra Rent Control Act, 1999 or leave the parties to determine the same by the Court of Tribunal under that Act. In the instant case before us, the two residential flats owned by the assessee are situated in one of the posh areas of South Mumbai at Walkeshwar Road . The residential flat no. 8 admeasuring 3062 square feet is let out by the assessee to its related party i.e. its Director Mr. Shapoorji Pallonji Mistry at a meagre monthly rent of Rs. 10,000/-. The AO was not satisfied with this monthly rental which was chargeable from its Director as in his opinion the rental were deflated by the assessee deliberately for letting out to its Director. The AO made enquiry from the websites of real estate companies such as magicbrick.com, 99acres.com etc and came to the finding that the prevailing market rental of similar flats in this area is Rs.200/- per square feet per month against which the assessee was charging rent of Rs.3.27 per square feet per month from its Director. The assessee has not disputed this value of Rs. 200 per square feet per month being excessive than prevailing market rate but contentions are advanced that the same can not be accepted as municipal rateable value is binding on the AO to identify the sum for which the property might be I.T.A. No.6414/Mum/2016 expected to let from year to year as the objective of municipal rateable value by municipal authorities are also same as the language used in the said act is para materia to what is used by the 1961 Act. There is a huge gap between the two rentals i.e. what is charged by the assessee from its Director and the market value per website of real estate companies .The flat in question being flat no. 8 is let out by the assessee to its Director which prima-facie reveals that intentionally rates are deflated due to relationship with its tenant and real position is not reflected in the valuation of rental charged from its Director .The municipal rateable value fixed for the year for the entire society was to the tune of Rs.4,91,804/- for FY 2011-12 while the same was Rs. 5,88,985/- for FY 2004-05. The assessee adopted municipal rateable value of Rs. 5,88,985/- which translates into rateable value of Rs.1.61 per square feet per month, which is also not indicative of the real position of market rental if compared with market rent as per websites of real estate companies which reflect market rent of Rs. 200 per square feet per month for which these flats might reasonably be expected to be let from year to year as is contemplated u/s 23(1)(a). The flat no. 3 is lying vacant and ALV is to be computed as per Section 23(1)(a) on similar lines as to the sum for which the said flat might reasonably be expected to be let on year to year basis. The plea that the municipal rateable value was finally accepted in earlier years while computing ALV u/s 23(1)(a) and since the actual rent of flat no. 8 was higher than the municipal rateable value, the same was adopted while computing ALV as is contemplated u/s 23(1)(b) is of no avail to the assessee as principles of Res judicata are not applicable to the income tax proceedings although we are aware that consistency is required to be maintained. Reference is drawn to the decision of Hon‟ble Supreme Court in the case of Radhasoami Satsang v. CIT (1992) 193 ITR 321(SC). The decisions as is referred to by the assessee cannot be accepted as these decisions in the case of CIT v. Prabhabati Bansali(supra) , M.V Sonavala v. CIT (supra) and Dewan Daulat Rai Kapoor v. NDMC (supra) were duly considered by Hon‟ble Bombay High Court in Tip Top Typography (supra) to arrive at conclusion . The decision of Hon‟ble Supreme Court in the case of Smt. Padma Debi(supra) has also stressed upon finding out a bargain between a willing lessor and a willing lessee uninfluenced by any extraneous circumstances may afford a guiding test of reasonableness. An inflated or deflated rate of rent based upon fraud , emergency, relationship I.T.A. No.6414/Mum/2016 and such other consideration may take it out of the bounds of reasonableness. The reliance of the assessee in the case of CIT v. R. Dalmia(supra) also shall be no avail as in this case the Hon‟ble Delhi High Court has already held that there may be cases in which the annual value fixed under the municipal law may be unacceptable to the income-tax authorities for good reasons. The Hon‟ble Delhi High Court held that they have not laid down any general principle that the income-tax authorities must adopt the municipal value as being correct. Normally the value should be accepted but if there is an under-valuation , it is certainly open to the Income-tax Officer to fix the value on his own on the basis of expected reasonable rent. Reference at this stage is also drawn to decision of Hon‟ble Supreme Court in the case of Joshi Technolgies International Inc. V. UOI reported in (2015) 57 taxmann.com 290(SC) wherein the taxpayer was denied the benefit of Section 42 for the year under consideration as the taxpayer was found to be not entitled for the said benefit, despite the fact that benefit of Section 42 was granted by Revenue to the taxpayers in the earlier years. Thus, under these circumstances keeping in view factual matrix of the case discussed in extenso above and recent decision of Hon‟ble Bombay High Court in the case of Tip Top Typography(supra), we are of the considered view that this matter need to be restored back to the file of the AO for making making denovo assessment after make necessary enquires and investigation in line with decision of Hon‟ble Bombay High Court in the case of Tip Top Typography(supra) and after providing proper and adequate opportunity of being heard to the assessee . The evidences/explanation submitted by the assessee in its defence shall be admitted by the AO and adjudicated on merits in accordance with law. This ground no. 1 of the Revenue is allowed for statistical purposes. We order accordingly.